Joint ventures

Joint ventures in the context of the Group

It has been a year of significant expansion and major transactions
for the JV business.

The JVs have facilitated good relative portfolio performance
at Group level for the second half and brought in assets with
repositioning‚ refurbishment and redevelopment potential.
All the JVs are structured as 50:50 partnerships with the Group
managing the property for an appropriate fee. Our JV partners
are well regarded‚ long term‚ major owners of UK real estate who
rely on our specialism in the central London markets.

Our JVs are increasingly material to the Group‚ making up 50% of
property assets‚ 37% of net assets and 36% of rent roll at March
2008 (at March 2007: 24%‚ 16% and 13% respectively).

We believe that the JVs will continue to provide a competitive
advantage to the Group as their portfolios are rich with rental
growth opportunity and our partners are supportive in terms
of capital‚ reputation and relationships.

Good performance

On an overall basis‚ the JVs combined rental income grew by
289% to £21.8 million and adjusted profit before tax increased by
419% to £16.1 million due mainly to the investment in the Great
Capital Partnership (“GCP”). On an underlying‚ like-for-like basis‚
rental income grew by 36% primarily due to leasing at 180 Great
Portland Street‚ W1.

Management fees payable to the Group by the joint ventures were
up substantially to £5.8 million (2007: £1.6 million).

The portfolio movement for the joint ventures produced a
reduction of 2.0%‚ as rental value growth and lease restructuring
gains were outweighed by rising investment yields and up front
acquisition costs.

Composition and activities of our JV business

The major change during the year was the formation of GCP in
April 2007 which subsequently saw further investments in August
and December. In early 2008‚ GCP announced a major property
swap and lease restructuring with The Crown Estate and arranged
a new £225 million non-recourse debt facility. Further details on
these events are set out within the Recycling capital and Our financial position sections.

At Great Wigmore Partnership (“GWP”) we have seen
excellent results in leasing at the completed 180 Great Portland
Street‚ W1 development‚ where the last office lease was signed at
£67.50 per sq ft in January‚ some 38% ahead of the rental value
of the building at the start of the letting campaign a year earlier.
At the Wigmore Street Island Site there has been good progress
in working up a potential redevelopment of the offices through
securing planning consent and aligning occupational leases to
gain vacant possession.

The two Great Victoria joint ventures‚ (“GVP1”) and (“GVP2”)‚
produced solid performance with encouraging lettings at the
Mount Royal retail block in Oxford Street and the completion
of the redevelopment at the former Liberty department store at
208/222 Regent Street‚ W1 where the retailer GAP‚ the last of the
new lettings at the building‚ opened for trading in August.

Just before the year end‚ we set up The Great Ropemaker
Partnership (“GRP”)‚ a new 50:50 JV with BP Pension Fund‚ to own
and potentially develop 240 Blackfriars Road‚ SE1. GRP acquired the
site from the Group for an initial consideration of £20.5 million.
In addition‚ £2.0 million is payable in enhanced fees if the site is
redeveloped and a further £5.0 million in priority payments become
due if various performance hurdles are met.